The Age has today reported that the International Monetary Fund (IMF) told the world it will need $1 trillion to stave off a ‘1930s moment’. The money would go to nations such as Italy and Spain which are in economic crisis to stop the rest of the world from being dragged down.
A trillion is a difficult number to comprehend. To give you some idea one trillion seconds ago it was about 30,000 BC, give or take a few decades. So where does $1 trillion come from? The IMF has stated that half of the $1 trillion will need to come from backers such as Australia.
The IMF chief Christine Lagarde explained that when the world faces an economic downturn people get scared and stop spending. This makes the financial situation worse, because you have to spend money to make money. The Age also reported that Ms Lagarde explained “countries such as Australia which could readily finance higher deficits should allow them to climb rather than cut back if the world turned down.”
The Treasurer, Wayne Swan, supports the IMF’s views, but the Shadow Treasurer, Joe Hockey, isn’t so sure.
To find out more read the full article from The Age.
Do you have an opinion? Rachel blogs about Australia handing out money. Do you agree with her, or hasn’t she got a clue?